*Breaking News* RBA surprise call with rate hike

In what has come to a surprise to many, the RBA has increased the cash rate by 0.25% taking the official cash rate to 3.85%.

Many economists (70% of those interviewed by Bloomberg pre-meeting) had actually predicted that the RBA would hold the cash rate today, following last month's pause.

However, in what has surprised some and disappointed many home loan customers, the RBA raised the cash rate for the 11th time by 0.25% citing that "inflation has passed it's peak but at 7% it is still too high".

The consequence for variable rate home loan customers is that it is likely that lenders will follow suit, as they have continued to do throughout the 11 months of increases. If this is the case, it will see an increase to home loan interest rates and therefore repayments for affected variable rate customers.

For those customers (800,000 Australia wide coming out of a fixed rate between now and the end of this year to the start of next year), it means the daunting prospect of reverting to a variable rate that is above 6%. This will see a big increase in repayments especially for those coming out of a fixed rate at high 1% or 2%.

For these customers, it would be important to consider what options there are to refinance to get the rate lower as much as possible as well as to take advantage of any cash back offers.

Admittedly the dust is still settling from today's announcement. We will see the consequence of this rate hike over the coming days for both home loan customers but more broadly for those in the market wanting to buy or sell a home.